January 23, 2019 07:44

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Review the whole policy framework for FDI incentives

12:04 | 02/05/2018

VCN- The draft Strategy and Strategic Orientation for FDI attraction in the period 2018-2030 has just been announced by the Ministry of Planning and Investment, widely consulted by individuals and organizations.

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It is necessary to regularly study the market as well as re-evaluate the priority sectors to promote FDI.

According to the drafting agency, the strategy and strategic orientation for attracting new generation FDI in the period 2018-2030 is the roadmap for Vietnam to attract "next generation" of FDI to further promote economic growth extensively in the period 2018-2030.

The implementation of this strategy is in line with Viet Nam's Socio-Economic Development Strategy for 2011-2020 and Vietnam's Socio-Economic Development Plan for 2016-2020, in line with 2035 Viet Nam's Report towards prosperity, creativity, justice and democracy.

According to the draft Strategy, in 2017, Vietnam is facing a paradox of attracting FDI inflows and surpassing other countries in ASEAN. On the other hand, stakeholders had a general view that FDI did not meet their expectations.

The main focus of the "Next Generation of FDI" strategy is the shift from attracting appropriate investors to product development (i.e business environment) and appropriate investment conditions for the kind of investment that Vietnam needs in the future, thereby maximizing the spillover effects and added value of FDI.

In the field of investment priority, according to the drafting agency, it will apply the sector review method and seek answers for questions on areas where active investment promotion is mostly needed. Accordingly, FDI will bring the most value, resulting in the following key industry categories: automotive, motorcycle and ancillary industries (metal / mineral / chemical / plastics) machinery, industrial equipment, logistics, high-value new agricultural products, environmental technology, renewable energy, and IT application services.

Along with that, important cross-cutting service sectors that need to continue to be open to growth, such as financial services and education, have been selected initially and agreed by the involved parties.

The draft also stresses that due to the rapid pace of change and the emergence of new industries, it is necessary to regularly study the market as well as re-evaluate the priority sectors for investment promotion.

The next generation of FDI attraction in the period 2018-2030 also offers recommendations to effectively attract this source of capital. Accordingly, a new "next generation of foreign investment management agency" should be set up to provide more integrated functions to guide the implementation of the new generation of FDI strategy.

In addition, the promotion of investment, including the scope of investment promotion, approach, tools and performance indicators should be implemented.

Along with that, specific policies and solutions should be implemented to increase the upstream linkage and technology spillover effects due to FDI, especially among foreign FDI seekers who are looking for efficiency when coming to Vietnam.

In addition, the supply of skills should be promoted to facilitate the attraction of new generation FDI. The better skill supply will be the decisive factor in Vietnam's competitiveness in terms of FDI attraction in the future.

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At the same time, it is important to revise the current investment incentive framework and to re-establish the balance between "profit-based" incentives with "efficiency-based" incentives, whereby transfers the provisions of the Investment Law to the Tax and Customs Law, with the support of an effective monitoring and evaluation system.

By H.Anh/ Hoang Anh